Category Archives: Resolve Loan Debt

With student loan debts possibly being over $30,000 once a student graduates, it’s important to plan ahead of how to successfully pay off your student loan debt and not feel the financial pressure. Here are a few techniques to successfully manage your student loan debt.

Get an Accurate Measure of Your Debt

Before you graduate from school, calculating your total and up to date balance can keep you in the loop of how much you have borrowed and what you are looking at being responsible for paying back. If you are starting after you have completed school, do so as soon as possible.

Contact your school and ask them to send you a copy of your financial aid history. This will have each disbursed loan and grant amount sent to the school. You can also ask your lenders for a copy of your account balance. Finally, log onto the National Student Loan Database (NSLDS) to pull your electronic history of your disbursed financial aid. Be sure to contact any private lenders as well to get their copies. Now compare the three and verify the accuracy of your account balance. If there are any inaccuracies, contact the lender as soon as possible to get everything straightened out.

Create Your Financial Plan

Now that you have calculated all of your loan balance, you can create yourself a budget. The true budget needs to consist of your student loans, current living expenses, and any additional debts. However, first we will just calculate your monthly living expenses and current debts and subtract that from your monthly income. Be sure to leave room for entertainment expenses and money to put into a savings account.

The number you reach afterwards should be positive. If not, and you are in the red, you need to come up with a plan to get yourself out of your current debt situation. If you are in the green, congratulations, this amount can be used towards paying down your student loan debt. Now you have a number to bring back to your student loan lenders.

Go Over Repayment Options with Lenders

Contact your student loan lenders to decide on your repayment plan. You already selected a plan when you completed your Master Promissory Note. However, you are at liberty to change your repayment plan. There are four basic loan repayment options, all of which can be switched to another plan at any time. Be sure to go over options with your lender if you are not able to make any payments.

The standard repayment plan allows you to pay a minimum of $50 per month. This amount is fixed and expected to be paid off in 10 years. This helps you alleviate your debt the fastest.

The extended repayment plan allows you up to 25 years to pay off your debt and keep a small minimum payment. However, you will have a longer life of the loan and the interest will still accrue on the balance.

The income contingency plan allows you to make your payment based off your income. These payments can increase or decrease as your income fluctuates.

The graduated repayment plan allows you to make small payments that will increase over time.

Make sure to talk to your lender regarding incentives. Most will lower your interest rate if you select an automatic payment plan. Another incentive is the loan forgiveness program. Working in a public service job in a low-income community or volunteering at these jobs, can student loan debt. Visit the College Debt Solution to find out more about the Loan Forgiveness Program.

Payment Options

If you need to strategize on paying your loans off, target paying your private loans off first. Their interest rate may be higher thus increasing the amount you pay back substantially more, if you cannot afford to pay more on it. Also, you may not have access to other loan incentives like multiple payment options.

Reports suggest that 60% of the college students are drowning in college debt as they took out too many student loans to finance their bachelor’s degrees. The College Board reports released in the last month of October, 2013 shows that the students have borrowed an average of $27,000 on educational loan debt. The students who pursue a master’s or a professional degree usually tens and thousands of dollars on their tab. In fact, student loan debt crisis is the next big disaster that is going to paralyze an entire generation. If only the graduates could think of some ways through which they could avoid the burden of student loan debt, they could have graduated into a better and brighter future. Repaying student loan debt is a huge responsibility as there is no other option of discharging the debts through bankruptcy. Here are some tips that you can follow in order to eliminate student loan debt and maintain a safe distance with the same.

1. Look for scholarships if you’re still in school: Are you still in school while you find yourself saddled with student loan debt? Well, scholarships may be there in your mind when you’re applying for your school but always remember that you keep looking out for them throughout college so that you can match your extracurricular and academic accomplishments. You can have a talk with the financial aid office of your school to inquire about funds that are specifically beneficial for your school. Applying might take some time but this is free money and therefore you should give your best efforts.

2. Get organized with your finances: Being a student and staying out of state, doesn’t give you the right to take all the wrong decisions about your finances. In order to tackle your student loan debt, the first step that you need to take is to organize your finances so that you don’t miss payments and make late payments. Use a calendar or a tracking tool in order to keep a tab on each and every dollar that you spend. Set up a different account for bill payment.

3. Follow a frugal budget: You can follow a frugal budget in order to eliminate all the worries of missing payments and incurring late fees and penalties. Unless you devise a frugal budget, you won’t be able to maintain a track on your pennies. You need to keep a close watch on your money so that you don’t make the mistake of spending more than what you earn. Always spend less than what you make so that you have enough to save.

4. Try the loan forgiveness options: If you want to eliminate your student loan debt without repaying them and without seeking professional debt help, you may try forgiving the student loan debt through different public service programs.You can certainly help yourself by forgiving a portion of your student loan debt but in lieu of that, you have to agree to work in high need areas for a fixed number of years (see requirements). These areas include the rural communities and schools and medical clinics and even low income families.

Therefore, when it comes to repaying your student loan debt, you have to take some watchful steps about managing your finances and keeping debts at bay. Follow the steps mentioned above and get help of the professional financial advisors in order to stay on the right track.

The Health Care Reconciliation bill of 2010 pretty much stated that there was too much of the government backing loans made to students via private lenders, as well as lending the government’s money to students for additional loans. To put a halt to it all, the government switched all of their loans, which were serviced through the Department of Education, to new loan servicing companies. Apparently, it wasn’t to any lender in particular, offering no rhyme or reason. This change came with no warning and no advice to lenders.

Responsible student loan borrowers would soon learn of this through alarming methods. Some of these methods were logging into their National Student Loan Data System and discovering their loan was now at a zero dollar balance. The calls would soon flood the Department of Education phone lines with concerns of high interest, assumed missed payments, and defaulted loans. Once explained what has happened, the concerns shifted to why notifications were not sent, who were these new lenders and if they had good lending practices.

Some borrowers experienced issues having their automatic payments set up properly. Others had their monthly payment amounts and schedules shifted. Many would think a lower payment would be better and more affordable. Some people may have taken this as a great new start. Others looked at it as a scam. The lower the payment meant more outstanding balance to have the interest accumulate on. This also extends the life of the loan to be paid off, in some cases from five to seven years or possibly more. Not knowing their loans were switched over and payments not going through means they were falling behind on their payments and any student loan is reported on the credit report.

Student loan debt is a driving factor for our slowing economy. Without having the money to pay back, a borrower can default on their loan and hinder future purchases requiring credit. Below are four interesting facts about student loan debt.

How Many Student Loan Borrowers Struggle?

14 percent of those who have outstanding student loan debt are behind at least one payment. This adds up to approximately $85 billion total during the first five years of taking a student loan. About 41 percent of borrows are behind in their loan payment. With the current rise of people enrolling in school, one could say that shortly almost half of student loan borrowers will owe and will default on their student loan.

Who Struggles In Student Loan Payments The Most?

So who struggles the most in paying their student loan back? It is shown that those in their 40’s and those who attend a for-profit and public two-year institutions struggle the most in paying their loan back. Also, those that do not finish with their undergraduate degree default many a times on their loans as well. There are resources available to those that may need help paying their loan.

Why Do They Struggle?

There are many reasons we’ll find for students and prior students to have high student loan debts and defaulted loans. It all boils down to them not having the money, of course. Those that have it do pay their loans. However, the economy has left many without a job, either they didn’t have one before they started school or were laid off or fired. Some are part time workers not making ends meet and must provide for their families. You will also find those with other personal debts trying to establish paying those off.

How Is Student Debt Impacting Borrowers – and the U.S. Economy?

The National Center for Education Statistics show that those with a Bachelors degree do earn 114 percent more than those without high school diplomas and 50 percent more than those with just a high school diploma. Young adults with an annual salary averaging $45,000 have a bachelors degree. This however does indicate having a student loan could impact taking other debts like purchasing a home.

The most incredible amount of debt that has been acquired over the last few years would be student loans. It is becoming harder and harder to be able to pay bills on time, which inevitably leads to the default on a student loan. Many graduates are getting jobs that do not require their degrees, as there are not enough jobs to go around. They are taking on jobs that pay far less than what they had intended to make, as it is becoming hard enough to survive let alone get to the student loan debt.

Debt consolidation is an option for those that need help making the payments more manageable. Student loan consolidation can make the bill that you would be paying monthly smaller. This may mean spending more time to pay on it, but they will work with you to make it easier on you. The people that run these types of businesses understand that you are struggling to make ends meet and want to help make life less stressful.

Private education loans are used when it is absolutely necessary, or at least should be. They have flexible payment plans, but it is more expensive than federal loans. Not only that, but more often than not—you should have some great credit if you would like to be accepted. Make sure the go through the federal loans process first.

The federal consolidation loan can be another option. Consolidating federal student loans can help make the monthly payments get lower, though the overall cost will more than likely increase. There are also benefits that having certain loans may have. Those benefits will disappear. Look into all of the details before moving forward. This could be the more simplistic option that is out there.